BySHIRIT AVITAN COHEN/GLOBES/TNS

JULY 26, 2026 08:33

Updated: JULY 26, 2026 08:34

Over the last two years, references to AI-related staff reductions have grown common among technology firms. A rising number of businesses, above all in software, are trimming teams and naming AI progress as the key factor. These actions sometimes eliminate a large share of staff in one swift move.

Such reductions stem from several causes, often combined. Progress in AI has produced cases where automated systems take over human duties or finish them at greater speed and lower expense. At times firms trim personnel to redirect funds toward essential AI spending.

In some situations AI growth endangers existing company models, forcing cutbacks and adaptation for survival in the evolving landscape. Observers have labeled this trend the SaaSpocalypse, signaling a crisis for cloud-based subscription software providers.

Stock values in the field have dropped sharply in recent months as markets worry that AI may undermine or replace the offerings and the subscription model itself.

It is also true that some firms may cite AI to justify deep cuts they planned regardless of new technology.

Impact Reaches Israeli Firms

These changes are hitting Israeli software companies hard. The latest case is monday.com, which said Wednesday it would cut 620 roles, or roughly 20 percent of staff.

At the close of 2025 the firm employed 1,729 people in Israel, about 55 percent of its total. It offers an AI-driven work management platform and trades on Nasdaq with a market value of 3.1 billion dollars after shares fell about 75 percent over the past year.

Co-founders Roy Mann and Eran Zinman described the shift as the biggest since launch. The firm is moving from a work management tool to one that performs tasks via integrated AI agents, letting people and agents collaborate. A new pricing approach lets customers purchase credits to access features.

Markets remain unconvinced, with the share price near recent lows.

Avishai Abrahami, founder and CEO of Wix and a monday.com board member, has faced similar pressures.

Wix helps users create and run websites. Last year it bought Base44 to address AI-driven change. The acquired firm focuses on natural-language coding that lets people build digital products without writing code.

Base44 now drives Wix growth, lifting annual recurring revenue from a few million dollars to about 150 million in one year. Investors remain cautious, with Wix shares down 67 percent over the past year despite a modest rebound from lows, mainly over fears AI will render traditional services obsolete.

Abrahami told the podcast 20VC he would like to envision a future with 1,000 staff at Base44, 1,000 at Wix, and the rest as AI agents, yet he doubts it will happen soon. He noted that expectations for AI capabilities are often overstated.

Wix reduced its workforce by 20 percent, or about 1,000 positions, this year. The move was tied both to AI needs for a leaner operation and to a stronger shekel.

Fiverr Workforce Reductions

Fiverr acted nearly a year ago. Led by founder CEO Micha Kaufman, the company cut 250 roles last September, about one-third of its staff.

Kaufman said rapid technology shifts demand fresh thinking and faster action. The firm aims to grow ambitiously as an AI-focused platform.

It streamlined management layers to regain a startup feel. Investors have stayed wary, with shares down about 58 percent in the past year.

These Israeli cases fit a wider pattern. TechCrunch reported 165,000 global layoffs in the first half of 2026. Oracle cut 13 percent of staff, or 21,000 roles, while Microsoft announced 4,800 reductions after earlier cuts justified by AI investment needs.

Salesforce trimmed 4,000 customer-support positions last year, with the CEO citing AI as the reason fewer people were required.

Some Firms Resume Hiring

Intuit cut 3,000 jobs, or 17 percent of its workforce, a month ago to focus on AI products. CEO Sasan Goodarzi told CNBC the goal was greater efficiency, not AI replacement. Recent reports suggest companies are rethinking heavy AI emphasis at the expense of staff.

A Ford vice president noted in one article that the firm is rehiring engineers, calling AI a strong tool limited by training data quality. An IBM leader warned that skipping entry-level hires could leave talent gaps in three to five years.

Forbes observed some firms rehiring after AI trials. They first reduce headcount expecting AI to handle tasks, then restore positions when automation covers only about 60 percent of the work.

While no clear reversal has emerged, doubt persists among firms cutting staff, investing in AI, and investors seeking clearer results.